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Facts
The assessee did not file her return of income for AY 2015-16. The AO, based on information about an immovable property purchase and time deposit, reopened the case under Section 147 of the Income Tax Act, 1961. The assessee failed to comply with the notices issued.
Held
The Tribunal held that the reopening of assessment was in accordance with law as the condition of income escapement being Rs. 50 Lakhs or more was satisfied. However, since the evidence regarding the source of investment in the immovable property and fixed deposit was not furnished before the lower authorities, the matter was set aside to the Assessing Officer for another opportunity.
Key Issues
Whether the reopening of assessment under Section 147/148A was valid and whether the additions made on account of unexplained investment and money were justified, considering the assessee was not provided adequate opportunity to produce evidence.
Sections Cited
147, 148, 148A, 144, 149, 69, 69A, 271(1)(c), 234A, 234B, 234C, 234D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of the Commissioner of Income Tax, Ahmedabad - 13 (in short ‘CIT(A)’) dated 24.07.2024 for the Assessment Year (A.Y.) 2015-16.
The brief facts of the case are that the assessee did not file her return of income for the A.Y. 2015-16. The Assessing Officer, on the basis of information that the assessee had purchased immovable property of Rs.33,83,700/-, made time deposit of Rs.24,80,737/- and also received interest of Rs.17,120/- during the year; had reopened the case under Section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) after recording reason and obtaining approval of Principal Chief CIT, Gujarat. A show cause notice under Section 148A of the Act was issued to the assessee on 17.03.2022, to which no compliance was made. In the assessment proceedings also, no compliance was made by the assessee in spite of multiple opportunities provided by the AO. Therefore, the Assessing Officer had completed the assessment ex-parte under Section 147 read with Section 144 of the Act on 20.05.2023 at total income of Rs.59,30,750/-.
3. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
Now the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal: - “1 The order passed by lower authorities is bad in law and required to be quashed.
2. The reopening of assessment u/s.148 is bad in law as same has been done for verification purpose only for making fishing and roving inquiries.
The reopening of assessment is required to be quashed as the case has been reopened beyond period of limitation as per section 149 of the Income Tax Act.
4. Ld. CIT (A) erred in law and on facts in confirming addition of Rs 33,83,700/- as unexplained investment by invoking section 69 of the Act of full amount ignoring fact that appellant is having 50% share in impugned property.
5. Ld. CIT (A) erred in law and on facts in confirming addition of Rs.33,83,700/- u/s. 69 of the Act ignoring fact that impugned property was purchased from explained sources and all evidences were on record.
6. Ld. CIT (A) erred in law and on facts in confirming addition of Rs.24,80,737/- as unexplained money by invoking section 69A of the Act ignoring fact that said investment was not made in this assessment year.
Assessment Year: 2015-16 Damyanti Hiteshkumar Patel vs. DCIT Page 3 of 7 7. Ld. CIT (A) erred in law and on facts in making addition of Rs.66,316/- of interest income. 8. Initiation of penalty proceedings u/s.271(1)(c) is unjustified. 9. Charging of Interest u/s.234A, 234B, 234C & 234D are unjustified.”
Grounds on reopening
Shri Parin Shah, Ld. AR of the assessee submitted that the reopening of the assessment under Section 148 of the Act was bad in law. He explained that the case was reopened beyond three years and one of the conditions for reopening beyond three years was that the income escaped assessment should be Rs.50 lakhs or more, which was not fulfilled in this case. He explained that the Assessing Officer had recorded escapement of Rs.24,80,737/- in respect of time deposit. The Ld. AR contended that this time deposit was only renewal of the earlier deposit and no fresh time deposit of Rs.24,80,737/- was made during the year. Therefore, there was no escapement of income of Rs.50 Lakhs or more during the year.
Per contra, Shri C. Dharani Nath, Sr DR submitted that the Assessing Officer had given a finding in the reasons as recorded that the income escaped assessment was to the extent of Rs.58,81,557/-. Therefore, the condition of income escaped being Rs.50 Lakhs or more was duly satisfied in this case. He further submitted that no compliance was made by the assessee in response to the notice under Section 148A of the Act.
We have considered the rival submissions. In the reason as recorded by the Assessing Officer, there was a specific mention of escapement of income to the extent of Rs.58,81,557/-. Thus, the condition Assessment Year: 2015-16 Damyanti Hiteshkumar Patel vs. DCIT Page 4 of 7 that the income escaped should be Rs.50 Lakhs or more is found to be duly satisfied. In response to notice under Section 148A of the Act, no compliance was made by the assessee. In fact, the assessee has neither complied before the Assessing Officer nor before the Ld. CIT(A). Having neither filed return of income nor complied before the lower authorities, the assessee now cannot take a plea that the income escaped assessment was less than Rs.50 Lakhs. From the materials on record before the Assessing Officer as well as in the reasons as recorded by the Assessing Officer, the condition of escapement of income of Rs.50 Lakhs or more is found to be duly satisfied. Therefore, the reopening as done by the Assessing Officer is found to be in accordance with the provisions of law. Therefore, ground no.-2 taken by the assessee is dismissed.
As regards ground no.3, the assessee has been unable to demonstrate as to how the reopening done by the Assessing Officer was beyond the limitation period. Hence, this ground is also dismissed.
Grounds on merit
As regards remaining grounds in respect of merit of addition made by the Assessing Officer, the Ld. AR submitted that the assessee had filed the explanation before the Assessing Officer vide letter dated 19.04.2023, which was not considered by him. The Ld. AR submitted that the explanation of the assessee was considered by the Ld. CIT(A) and he had required certain additional evidences to be filed in support of the explanation. However, as the additional evidences could not be filed before the Ld. CIT(A), he had dismissed the appeal of the assessee. The Ld. AR explained that the investment in the immovable property as well as in the time deposit was made by the assessee out of the funds received from her husband who was working in Nairobi. As the collection of Assessment Year: 2015-16 Damyanti Hiteshkumar Patel vs. DCIT Page 5 of 7 additional evidence took considerable time, the same could not be placed before the Ld. CIT(A). He, therefore, requested that another opportunity may be provided to the assessee to produce the evidences in support of investments made by the assessee and for this purpose the matter may be set aside to the file of the Assessing Officer.
Per contra, the Ld. Sr. DR had no objection if the matter was set aside to the file of the Assessing Officer.
We have considered the submissions of the assessee. A copy of the letter dated 19.04.2023 addressed to the Assessing Officer has been brought to record in the paper book. However, there is no evidence that this letter was actually filed before the Assessing Officer. On the other hand, the Ld. CIT(A) had considered the submission of the assessee that the investment in the immovable property was made by the assessee out of her husband’s savings earned in Nairobi. The fixed deposit was also stated to be made out of foreign earnings of her husband. The Ld. CIT(A) required the assessee to file additional evidences in respect of the explanation for investments as made. However, since no supporting evidence in respect of the source of investment in the immovable property as well as in the FDR was brought on record, the Ld. CIT(A) had confirmed the additions and dismissed the appeal of the assessee. The contention of the assessee is that the property was purchased by the assessee jointly with her husband. The assessee has filed a copy of the purchase deed, proof of payment made from outside India/cheques directly issued from Bank at Nairobi and the receipt of the builder. Regarding investment in deposit also, the assessee has explained that GBP22549 equivalent to Rs.22,57,154/- was transferred on 03.10.2013 which was utilised for making fixed deposit of Rs.22,09,486/- in the year 2013. The same fixed Assessment Year: 2015-16 Damyanti Hiteshkumar Patel vs. DCIT Page 6 of 7 deposit was renewed in the current year along with interest accrued thereon. As these evidences were not furnished before the lower authorities, we deem it proper to set aside the matter to the file of the Assessing Officer with the direction to allow another opportunity to the assessee to explain the source of investment in the immovable property as well as in the fixed deposit. The assessee will be free to produce the evidences brought on record before us along with any other evidences as deemed fit, in order to explain the source of investment/ deposit made by her. The assessee is also directed to make compliance before the Assessing Officer and not to seek adjournment without any pressing reason.
In the result, appeal of the assessee is partly allowed for statistical purpose.
Order pronounced in the open Court on this 22nd May, 2025.